Despite some recent high-profile failures, food retailers still clearly believe that successfully reducing food waste has financial and competitive upsides that make it worth the fight.

In this ongoing series, Schieber Research is focusing in on companies and organizations that are creating impactful change on the issue of food waste and looking at industry innovations that are aiding them in their efforts. Here we dive into the retail side of the equation. Take me to “Part 1: The Food Waste Problem” first.

Grocers around the world are leading the charge in the fight against food waste – unfortunately, recent headlines would appear to indicate that they’re not having much success.

In May, British supermarket chain Sainsbury’s announced that it was axing its £1 million Waste Less, Save More trial initiative in the English town of Swadlincote, which tested a host of different ways to cut food waste and save consumers money, from handing out free smart refrigerators to opening community pantries for unsold food. After three years, only a 9 percent reduction in food waste was recorded, well short of the 50 percent target.

Just a month before that, the U.S. non-profit Center for Biological Diversity, graded America’s top retailers on their food reduction efforts, and only Walmart scored a B. Six of the 10 got a D or F including Target, Costco and Whole Foods.

Meanwhile, the U.K.’s largest retailer, Tesco, which has been a pioneer in food waste reduction efforts, just announced that it fell short, very short, of its goal to completely eliminate edible food waste in its operations by February of this year. Instead, the company’s food waste footprint actually increased by more than 6,000 metric tons.

Are Grocers ‘Inherently Wasteful’?

“Tesco’s failure to eliminate food waste completely in its own operations – let alone in its supply chain or in its customers’ homes – despite its undisputed leadership and its commitment to doing do, suggests to us that supermarkets’ business models and ownership structure make them inherently wasteful,” said Carina Millstone, executive director of the UK charity Feedback Global. “We look forward to Tesco proving us wrong.”

And they intend to. In fact, despite missed milestones and lackluster results, not one of these retailers is dropping their food waste reduction efforts. But why, given the apparently Sisyphean nature of the task?

The answer is simple – because the rewards for success are simply too big to ignore.

The food waste-focused non-profit Rethink Food Waste through Economics and Data (ReFED) estimates in its Roadmap to Reduce Food Waste that implementation of food waste prevention and recycling solutions has the potential to result in $1.9 billion of profit from revenue and cost savings. These solutions include consumer education campaigns, standardized date labeling and waste tracking.

And there’s another, less measurable advantage to taking on the challenge of food waste – in crowded markets like retail, social responsibility initiatives can give companies a competitive edge.

Earlier this year several of Amazon’s largest investors asked the Securities and Exchange Commission to force the company to release information about the amount of food waste in its operations. Amazon had brushed off previous direct requests from shareholders, saying that food waste “wasn’t material.” The shareholder request was eventually blocked by the SEC because food represented less than 1% of Amazon’s budget in 2017 (although that may not remain true for long as the company continues to expand its Whole Foods business). Now, an operation of Amazon’s size and scope might be able to get away with such nonchalance, but not many other companies can afford to show such blatant disregard for the concerns of their stakeholders.

Grocers’ Power Position

And the fact is that grocers are in a particularly powerful position to reduce food waste, not just in their own operations but across the food chain, although it might seem that way at first glance.

The UN’s Food and Agriculture Organization (FAO) estimates that in North America and Oceania, the Distribution & Market segment of the food chain accounts for the second smallest portion of Food Loss and Waste (or FLW), just 7 percent of the total in that region. In fact, around the globe, regardless of whether you’re looking at industrialized or less-developed regions, one thing is clear – retailers are not the biggest part of the problem.

But here’s why food retailers matter, perhaps more than anyone else in this equation – grocers, especially large national and multi-national chains, have influence that stretches well beyond their own segment of the food chain. They can impact FLW not only in their own operations, but also among their suppliers on the production side and their consumers at the other end.

Tesco has been working both sides of the equation for several years, with mixed results. For example, the company employs enhanced forecasting and ordering systems to manage bumper crops (crops that produce more than expected quantities) and offer multi-buy promotions on produce from those crops. Sometimes this works out great, like with this August’s Bank Holiday Bumper Berry Bonus, but sometimes the customer doesn’t hold up their (albeit unwitting) end of the bargain by buying all that excess, and the problem just gets pushed down the supply chain. In fact, Tesco pointed to these attempts to help farmers reduce their food waste as one of the reasons its own food waste increased.

Which begs the question, was Millstone right? Is there something inherently wasteful about the grocery business that can’t be changed? The truth is we don’t know for sure yet. What we do know is that the task is incredibly challenging, but there have been successes.

The Success Stories

There are a lot of caveats to the dire headlines we summarized at the start of this article – Tesco actually had a not unimpressive 64% reduction in edible food waste, but because food sales were up at the same time, that reduction didn’t translate into the overall tonnage of food wasted (none of which, by the way, ended up in a landfill, but instead was converted into energy sources).

And while Sainsburys did scrap the larger Waste Less, Save More initiative, several of the more successful elements, such as the Community Fridge Network, will live on and actually be expanded. The campaign was also very successful in raising consumer awareness with 64 percent of Sainsbury’s customers in Swadlincote saying they had already or were planning to change their behavior to cut food waste. An impressive number, given that ReFED estimates consumer education to be the single most cost-effective tactic in the fight against food waste.

Let’s take a look now at some of the other success stories in this battle, because there are many:

Turning surplus groceries into meals.Tesco has diverted the equivalent of 16 million meals of surplus food to 6,000 charities across the UK since 2012 through its work with the charity FareShare. And they’re not alone – Aldi, Amazon, Kroger and many others also have programs in place to donate surplus edible food. Walmart donates some of its food waste to Ecoscraps, which turns it into plant food (compost, potting mixes and plant foods) that is then sold at Walmart and other retailers.

Reacting faster with AI.Walmart’s new AI tool Eden (developed in-house) will inspect produce to monitor shelf life and predict spoilage with the resulting cost savings estimated at $2 billion in food waste over the next five years. Eden has already prevented $86 million in waste since it was deployed at 43 food distribution centers in January 2017. The system also incorporates tracking devices on produce to monitor temperature during travel and will be able to react to anomalies to avoid wastage like rerouting to a closer location if temperatures spike. Walmart also plans to expand the system to its farmers in the near future.

New ways to extend shelf life. U.S. grocer Stop & Shop realized that large piles of produce, while believed to be more attractive to consumers, were actually increasing spoilage rates. By decreasing the size and style of their displays, the retailer reported savings of $100 million annually with minimal impact on consumer experience. A number of retailers are also working with suppliers to develop innovative new packing solutions that extend produce shelf life.

Getting over the idea that produce has to be pretty. Walmart, Tesco, Asda and Intermarché are only some of the major grocers offering “ugly” produce – that is, food that is edible but has cosmetic flaws – at reduced prices. When French supermarket Intermarché debuted its Inglorious Fruits & Vegetables line in March 2014, the retailer saw a 24 percent increase in store traffic, which it attributed to the campaign. Tesco estimates that its Perfectly Imperfect line has saved more than 6,000 metric tons of produce from going to waste.

Standardizing date labels. In a recent survey from the Harvard Food Law and Policy Clinic, almost 85 percent of consumers said that they’d thrown out food based on the date on the package. However, in many cases, the dates on packaged food have nothing to do with how safe the food is, but rather a best guess as to how long the food will taste its freshest. Not to mention that many consumers are understandably confused by the distinctions between “Best if used by” and “Sell by” dates, and how they should respond once food passes these timeframes. To combat this, many retailers are working to standardize and simplify their date labeling practices, and Tesco is eliminating date labels completely from many of their products. Sainsbury’s has been testing out a new kind of smart label on its house brand ham that changes color depending on how long the pack has been open and the temperature at which it’s been kept, rather than featuring a hard date.

In this ongoing series, Schieber Research will focus in on companies and organizations that are creating impactful change on the issue of food waste – including food manufacturers, restaurants and consumers – and look at industry innovations that are aiding them in their efforts. Stay tuned soon for the next installment.

]]>https://researchci.com/grocers-are-refusing-to-give-up-in-the-fight-against-food-waste/feed/0Got CBD? The Rising Star in Functional Food, Beauty, Supplementshttps://researchci.com/got-cbd-the-rising-star-in-functional-food/
https://researchci.com/got-cbd-the-rising-star-in-functional-food/#respondWed, 16 Jan 2019 02:28:30 +0000https://researchci.com/?p=27333Our recent post on Consumer Health and Wellness Trends mentioned the rising interest in CBD by consumers. Beyond the inherent on-trend characteristics of CBD – it is Plant-based, keto-friendly, anti-inflammatory, naturally full of omega-3 and anxiety / stress-reducing – this hemp or marijuana derivative is also backed by new regulation.

This December, President Trump signed a new $867 billion farm bill that removed hemp from a list of federally controlled substances. According to the WSJ, farmers and processors believe growing demand for cannabidiol will turn hemp “into a lucrative cash crop”.

CBD oil and other hemp non-psychoactive derivatives can be seen in various industries: supplements, beverages, and beauty and personal care. What is CBD, then? It is a cannabidiol – an ingredient derived from hemp, a non-psychoactive variety of cannabis (in short, it won’t make you high, unlike the THC compound derived from Cannabis).

Sales forecasts vary: According to New Frontier Data, a cannabis research firm, products containing cannabidiol and other types of hemp will rise nearly 10-fold over a decade to $2.6 billion in 2022. According to cannabis industry analysts the Brightfield Group on the other hand, the hemp-CBD market alone could hit $22 billion by 2022. And the global industrial hemp market size is expected to reach USD 10.6 billion by 2025, according to a new report by Grand View Research, Inc.

No matter the specific number, consumers are definitely interested. In fact, according to Google Trends “Year in Search” 2018, the term “CBD gummies” was the 3rd biggest trend in the Food category (after Unicorn Cake and the recalled Romaine lettuce). To compare rising trend searches in the last 12 months on Google in the USA, we can see that CBD has risen slowly and steadily, reaching the level of interest in all things vegan:

A 5-year perspective demonstrates how this is a relatively new trend, only beginning to become mainstream in 2017:

Some brands are experiencing a huge rise in interest. The search for “Happy Tea” experienced a 4,750% rise in search volume in the last 90 days. The website claims that “Happy Tea offers 10mg natural hemp extract that has been studied for possible benefits effects on stress, anxiety, and inflammation. Unlike cannabis, hemp doesn’t have THC and won’t have psychoactive effects.”

Whole Greens CBD supplement, invites consumers to enhance their daily routine by “taking a drop of CBD Oil to start your morning, swallow a CBD Capsule in the afternoon, and then unwind in the evening with a CBD Gummy.” In the past 90 days, this brand saw a 3,250% rise in search volume.

As Daily Coffee News puts it: “We’ve seen CBD coffee pods, CBD coffee tinctures, CBD-infused whole bean coffees and packaged CBD cold brews, all of which have made various claims related to the potential health benefits of CBD.” The magazine adds a caveat: “While it may be perfectly legal to sell such products in certain states — whether in a dispensary or in a cafe or elsewhere — positioning them for a broader push beyond state lines may still be risky business.” This is due to the FDA’s rigid stance on the influx of cannabis and hemp derived ingredients in the market, despite no claim approval by the agency.

One brand, Cuvee, has quite an elegant way of going around this. The website’s presentation of the Hemp Oil Coffee says: “If you believe in the powers of hemp oil, then we don’t have to tell you here. Which is good, because we aren’t allowed. Regulations and all that. Inside this can we’ve combined our original nitro cold brew with 10mg of Hemp Oil. The Hemp Oil is odorless and water-soluble, and tasteless when combined with coffee.”

But, as with any innovative ingredient that meets this type of consumer demand, the market is expected to boom only following an accelerated rate of product innovation that resonates with consumers on the application and flavor side, (similar to what happened in plant-based milk.)

One company that might be at the forefront of this change is Azuca, a line of all-natural cannabis edibles and ingredients founded by Chef Ron Silver (of Bubba’s NYC bistro – which also offers CBD infused items on its menu). Azuca is a privately-held, investor-backed cannabis company which commercializes a line of edible products using patent-pending technology. This technology envelops cannabis molecules in order to make them more water-soluble, increasing bioavailability and effectiveness and minimizing latency for more controlled, reliable edibles, according to the website.

In October 2018, the company launched a CBD division, with plans to offer hemp-derived cannabidiol (CBD) simple syrup direct to consumers as well as to restaurants, bars and coffee shops through a wholesale model.

Along with these start-ups, huge consumer goods companies are expected to zero in on CBD, while waiting to see cannabis at-large legalized in more markets and operating, meanwhile, in the legalized (including medical) marijuana industry.

The company’s president and CEO Rob Sands further stated that “I would say that there’s a lot of science as well as general belief that CBD as an organic compound has many positive and curative, in fact, health benefits. I think you may be aware that FDA just recently approved the first CBD drug in the United States to treat childhood epilepsy or seizure disorder. And then, CBD has other qualities potentially that people are seeking in organic products. So, the market could be very big. As I said, it’s not a psychoactive component, but it has properties that I think the consumer would be interested in.”

Other initiatives in the field include Molson Coors’ joint venture with a cannabis company in Quebec in August. And according to the NY Times, in September, Target.com began selling products that contained CBD, a nonpsychoactive cannabis derivative. But within days, the company changed its mind and removed the products.

And premium retailer Neiman Marcus is now offering a variety of CBD beauty products. “Our new CBD assortment is an important part of Neiman Marcus’ commitment to the health and well-being of our customers. Cannabis beauty brands are becoming increasingly popular and CBD products are the next big thing in beauty. Neiman Marcus plans to continue to expand our CBD assortment while offering customers the latest and greatest in Trending Beauty”, said Kim D’Angelo, Beauty Buyer, Neiman Marcus.

As CBD will expand in away-from-home establishments and perhaps introduced through the beauty and personal care market, it will become more “digestible” to consumers: and, with Stress being a Major Consumer Motivation, and mental health awareness on the rise, we expect CBD to be a welcome ingredient (even for your pooch).

]]>https://researchci.com/got-cbd-the-rising-star-in-functional-food/feed/0What the 2018 YouTube Leaderboard tell us about the Future of Video Adshttps://researchci.com/what-the-2018-youtube-leaderboard-tell-us-about-the-future-of-video-ads/
https://researchci.com/what-the-2018-youtube-leaderboard-tell-us-about-the-future-of-video-ads/#respondMon, 31 Dec 2018 06:36:24 +0000https://researchci.com/?p=27322The Stress-Free consumer trend is driving a new reality for brands. More than ever, American consumers are searching for entertaining content, spending over half of their leisure time watching TV content.

According to Think With Google, people are turning to YouTube to access a diverse and growing selection of visual and auditory videos to help them de-stress. Interest in videos related to “relaxing” is rising, with watch time increasing over 70% in the past 12 months. Some elements of this trend will be familiar — meditation and yoga videos, for example. Others might be a little more surprising, such as aquarium videos and slime ASMR. Interest in videos related to stress management is also on the rise, with watch time increasing by more than 60% year over year.

Humor Me.

When we look at the list of YouTube Ads Leaderboard: Global Year-End 2018, we see corresponding trends. First of all, the importance of a good laugh – or cry. With a rise in gaming and social media activity, consumers need more stimulation to keep them interested; but when they are interested, they can remain interested for a long time – another myth busted.

Amazon manages to showcase many of the Echo’s advantages – without diving into functionality.

Similarly, Samsung Galaxy uses storytelling to say that the new iPhone upgrade is switching to Galaxy, through a story of the wrongs of one mobile phone brand, instead of discussing functionality. This 1-minute long ad has 17,457,459 views.

Inspire Me.

Playing the same game, Gatorade built a virtual world around Lionel Messi on the theme of “chasing your dreams” and received 14,436,575 views for a 4-minutes long ad.

Brand Power.

With gaming on the rise, licensing becomes more important than ever.

Turkish Airlines managed to register 25,711,116 for a safety video – based on the Lego Movie.

Personalize It.

A Lego ad lets you “pick your own path” – with Lego Jurassic World.

As part of this trend, Walmart recently announced its strategic entertainment joint venture with Eko, a developer of interactive video technology. The joint venture includes plans to develop “original, interactive content that will enable Walmart to connect with customers in new and more meaningful ways, with the goal of driving deeper and more frequent engagement”, allowing viewers to participate in and shape stories as they are being told.

YouTubers, Twitchers and other influencers are shaping the advertising industry, as companies provide them with more tools to influence and convert views to sales: see Amazon’s new Blacksmith tool, for example. But beyond this evident trend, advertisers need to understand, and connect to the experience provided by gaming, to imitate the level of engagement created by games. No wonder, then, that PwC predicts VR to experience the highest CAGR % over the next 5 years, compared to other digital advertising segments.

source: https://www.pwc.com/gx/en/industries/tmt/media/outlook.html

Over the next five years, PwC expects data traffic levels will grow by a 22.3% CAGR, reaching 397.8 trillion megabytes in 2022. PwC attributes the growth in data consumption to consumers’ growing appetite for video content, which will account for 85.6% of total data consumption in 2022. 5G, as mentioned above, will contribute to this boost.

(Other advertising trends to look for include the rise of virtual assistants and Amazon Advertising; but this post has to end here, wishing you all a Happy and Healthy 2019!)

Main Themes

Looking at search trends in the USA from 2004 until today, we can see that consumer search for information related to calories has risen steadily, as did the interest in protein, whereas the keto diet has emerged seemingly out of nowhere, to surpass all other searches in 2018. We can see the start of the intermittent fasting trend.

Veganism is another long-term trend that began surging in late 2015.

source: Google Trends

Which Protein?

already in Oct., 2013, we suggested that the conversation re protein will be around “which source of protein” rather than “how much”. Indeed, this is the biggest change in conversation. While we are all aware that plant-based is considered healthier than meat, note that many consumers are trying to consume more fish and seafood over meat – more so than those searching for plant-based protein (according to GlobalData). Dairy products experienced this change due to Greek yogurt (and afterwards, other types of yogurt) marketers successful market education.

We therefore expect to see more innovation in seafood and fish, which will, in turn, create a wave of Pescetarianism.

As we mentioned in our 2018 Fancy Foods Report, there’s a huge rise in the interest in collagen in the last few years (we caught this one right before it took off, in 2014 – see our Sial Paris Report from back then).

Innovations:

Veganism

Plant-based isn’t a term consumers are searching for especially, but they are indeed looking to become “plant based” rather than “vegan”.

consumers (notably Millennials and Gen Z), who believe that “living an ethical or sustainable lifestyle is somewhat, or very important to their feeling of wellbeing or wellness” (78% of female consumers, 74% of male consumers worldwide according to GlobalData, 2018) and are looking for more plant-based options even if they are not plant based – “Flexitarians”

consumers wishing to avoid dairy and therefore looking for vegan (dairy free) options – these consumers increasingly perceive milk as unhealthy, due to lifestyle and nutrition plans, or their perception of milk’s negative contribution to gut health and bloating.

manufacturers and retailers, offering more plant based options, along with food tech companies developing meatless meat, eggless eggs, and milkless milk, to accomadate the nutritional and indulgent needs of these Flexitarians.

Diving in deeper, as consumers adopt a more “natural” and “mindful” lifestyle, they paradoxically are less interested in “vegan” products. Thus, the search for vegan recipes and products has subsided in the last year (based on Keyword Search tool) but the search for vegan restaurants – perceived as more natural and healthier – increased. According to this data, total search volume containing “vegan” stood at 4.5 million, a -10% decrease in the last 12 months.

Indeed, globally, consumers associate probiotics not only with digestive health (41%) but also with immune health (21%), general wellbeing (21%) according to a study by GlobalData.

Today, there is endless talk on this trend, and all major retailers and manufacturers agree that this is a major area for innovation.

Relevant trends include: Kombucha and “Gut Shots” entering mainstream; probiotics and prebiotics in food and beverages; inulin and other fiber incorporated into new categories; a steaming debate on legumes and lentils – gut friendly (PCRM) or “anti nutrient lectins” (Dr.Gundry)?

Major manufacturers announced that they will develop gut friendly products in this year’s CAGNY conference; An example for this year’s incumbents’ innovations include Kellogg’s “Happy Inside“, in addition to emerging cometitors’ innovation, such as Gutzy Organic‘s vegan fruit smoothies with pre-biotic fiber, and Purely Elizabeth‘s probiotic granola.

Many companies are investing in the area through their food tech and investment mechanisms, for example, General Mills’ investment in Farmhouse Culture, a brand consumers are searching for increasingly.

supplements are key in consumer searches on Gut Health and Leaky Guy, with ONNIT, RESTORE and PLEXUS rising in interest.

Intermittent Fasting (IF)

This is 2019’s new trend.

According to data accumulated by Keyword Search Tool, the search volume for Intermittent Fasting was 1.15 million searches in the past 12 month, an increase of +75% compared to last year.

Most searches related to the 16/8 method (16 hours of fast, an 8 hour eating window) and not the 5/2 method (5 days of regular eating and 2 non-consecutive days of eating up to 25% of regular consumption).

Keto

The Keto Diet trend, which we “caught” a while back in April, 2017, is the biggest thing to happen to low-carb since the Atkins diet, much more so than the Paleolithic diet. But, to compare to the Atkins diet, we can see how Keto, which seems like it’s here to stay, can disappaer as if it was never there, especially as it appeared as if “out of nowhere”.

According to Keyword Search Tool, total search volume was 8.5 million, an increase of +71% in the last 12 month.

Related innovations:

Which Oil?

The conversation on oil as the basis for healthy cooking remains. Coconut oil, which experienced a long-term growth and high volume of search, is now secondary in interest to CBD (Cannabidiol) and Hemp oil, supported by the Stress-Free Trend leading to the search for relaxing ingredients, that are positioned to support your mental health as well as your physical health. aIt seems safe to say that, more than coconut and MCT, CBD oil is the next “big” thing in oil as ingredient.

“Real Food”

Apart from these trends, All Natural, REAL FOOD is still the number one factor. This trend is highlighted by all “trendy” diets including Paleo, Keto, Whole30 etc., but it is also a general recommendation that resonates with the consumers.

According to research by GlobalData, 69% of consumers see “Natural” as the number 1 “healthy” claim.

All the major F&B companies have been tapping into this growth engine (or rather, market demand) for years; but over the last year, we saw some interesting M&As, including Pepsico’s acquisition of Health Warrior and Kraft-Heinz’s $200 mn acquisition of Primal Kitchen (following General Mills’ acquisition of Epic and Kellogg’s acquisition of RXBAR).

Some recent (and upcoming) launches, including Conagra’s Evol and Danone’s TwoGood, target the “mindful” consumer, balancing nutrition with indulgence – a trend which shifted consumers towards smaller, artisanal brands, that the big CPGs are now trying to win back.

What’s Next?

Food and beverage products are becoming a platform for personalized, nuanced ingredient delivery.

We expect Ayurveda to finally gain attention this year, as consumers will search for holistic but personalized solutions to their wellness conditions. This Indian approach to wellness is on the rise in European markets such as Germany and France, and it seems like a matter of time until we see Dosha-tailored products in the US.

In the meantime, hybrid concepts such as plant based keto are expected to surge along with the more permissive (nutrition wise) but restrictive (lifestyle wise) IF diet.

We provide tailor-made analyses and competitive intelligence to hundreds of companies around the world. Contact us to learn more about your industry, or book Hamutal Schieber for a trends and innovations lecture.

As the demand for food production grows alongside the world population, the issue of food waste is garnering increased attention.

In this ongoing series, Schieber Research will focus in on companies and organizations that are creating impactful change on the issue of food waste – including grocers, food manufacturers, restaurants and consumers – and look at industry innovations that are aiding them in their efforts. Here’s our introduction to the subject.

And it’s no wonder – food loss and waste, or FLW, can be incredibly costly. The UN’s Food and Agriculture Organization (FAO) estimates that one-third of all food produced in the world is lost or wasted each year, at a cost of approximately $990 billion USD globally. (Source: FAO, 2017)

Hidden Costs

Beyond the financial costs, there is a societal cost to consider as well, because this waste is occurring at a time when world hunger is on the rise – 11% percent of the world population, or 815 million people, are undernourished, according to the FAO. And with the world population expected to reach close to 10 billion by 2050, the demands on our global food production infrastructure will only increase in the coming decades. (Source: UN Dept of Economic & Social Affairs, 2015)

The environmental impact of food waste is not insignificant either, including greenhouse gas emissions from food waste at landfills, as well as the water, energy, cropland and fertilizer that is wasted growing food that isn’t eaten.

In light of all this, the benefits of reducing FLW globally are undeniable, but finding targeted solutions for a problem that spans borders, industries and a vast range of socio-economic conditions is a huge challenge.

“With almost a billion chronically hungry in the world, the idea that 30 percent of food produced annually is wasted is morally unacceptable and yet practically addressable,” said Raymond Offenheiser, former President, Oxfam America. “To capture this 30 percent will require both changes in attitudes and behavior as well as investment in technical solutions. Success would contribute meaningfully toward not only alleviating global hunger but also in reducing the production of greenhouse gas emissions that drive climate change.”

Cause and Effect

The sources of FLW vary greatly depending on country, with problems arising more often at the production side of the food chain in developing countries and on the consumer and retail side in more developed regions.

For example, in Sub-Saharan Africa and South & Southeast Asia, the bulk of FLW happens at the production and storage/handling stage (76% and 69%, respectively), while in North America, which is responsible for the largest portion (42%) of the world’s FLW, the majority of waste happens at the consumer level – 61% according to the World Resources Institute. The same holds true for Industrialized Asia (46% at consumer level) and Europe (52% at consumer level)

In fact, data from the food waste-focused non-profit Rethink Food Waste through Economics and Data (ReFED) indicates that consumer education campaigns could be the single most cost-effective tool in decreasing food waste in the U.S.

Incentives for Change

In September 2015, the UN General Assembly adopted 17 Sustainable Development Goals with the aim of ending poverty and hunger, protecting the planet and ensuring prosperity for the people of the world. One of these SDGs – UN SDG 12.3 as it is formally called – set the goal ofhalving food waste and reducing food loss worldwide by 2030. (Food waste and food loss, while closely tied, are not the same thing. Check out the sidebar to the right to understand the distinction.)

SDG 12.3 has prompted the creation of a slew of organizations and regulations aimed at motivating and in some cases even requiring companies and consumers to take action. Eighty state-level, food-waste related bills were introduced in the U.S. in 2017, according to Harvard’s Food Law and Policy Clinic, and in July of this year, the EU formalized a series of mandatory recycling targets and measures to reduce waste. Member countries have 24 months to translate these laws into national legislation.

In the less than three years since SDG 12.3 was adopted, 60% of the world’s 50 largest food companies by revenue have set FLW targets, and 10% have active FLW reduction programs in place, according to the 2017 Progress Report from Champions 12.3, a coalition dedicated to achieve the SDG 12.3 targets. These companies span the manufacturing, production, processing, and retail stages of the food value chain.

The potential to save money offers a strong incentive for companies to reduce FLW, and in some countries, regulation is making it a requirement rather than an option, but there’s another reason more and more organizations are focusing on food waste – consumers are beginning to care more.

The National Resource Defense Council’s 2017 “Wasted” report says that “consumer awareness is spreading like wildfire,” with the number of media articles about food waste growing 25 percent from 2011 to 2016, a major names in television including John Oliver and Anthony Bourdain taking on the topic. In a 2016 Ad Council poll, 74 percent of respondents said that the issue of wasted food was important to them.

A new report released earlier this month by the UN’s Intergovernmental Panel on Climate Change presented a grim prognosis for the planet’s future, generating a renewed sense of urgency around the issue. While food waste isn’t the first contributor people tend to think of when considering climate change, the FAO estimates that food waste across the supply chain contributes 8 percent of total global greenhouse gas emissions. And major media organizations are making food waste a part of the climate change conversation with headlines like “Food waste is a vastly overlooked driver of climate change” (The Washington Post) and “How the food that you throw out is linked to global warming” (NPR).

All that is to say that for a variety of reasons food waste is a growing concern for consumers, giving companies an additional incentive to act.

“Cutting food loss and waste is a no-brainer. Food loss and waste hurts people, costs money and harms the planet. If food loss and waste were a country, it would be the third largest greenhouse gas emitter in the world,” says Dr. Andrew Steer, President and Chief Executive Officer, World Resources Institute. “Thankfully, we are embarking on a journey where business, government and other leaders can use their voices to make a tangible difference to reach Target 12.3. These Champions have the power to convert momentum into a global movement.”

In this ongoing series, Schieber Research will focus in on companies and organizations that are creating impactful change on the issue of food waste – including grocers, food manufacturers, restaurants and consumers – and look at industry innovations that are aiding them in their efforts. Stay tuned soon for the next installment.

]]>https://researchci.com/food-waste-is-a-big-problem-heres-why/feed/02019 Food and Beverage Trends: Innovators & Disruptorshttps://researchci.com/2019-food-and-beverage-trends-innovators-disruptors/
https://researchci.com/2019-food-and-beverage-trends-innovators-disruptors/#respondMon, 05 Nov 2018 03:10:32 +0000https://researchci.com/?p=26999Our trend forecasting is based on 4 aspects – Macro-Trends (technological and digital trends, regulation, mega-trends, economic changes etc.), Innovators and Disruptors (emerging comanies that make the formerly impossible – possible and create new expectations), Best in Class (we follow the leading competitors in each industry, to see where they are taking the industry) and Consumers (we have access to global and local surveys and sales data, and monitor search trends to understand met and unmet needs and themes).

This analysis pertains to: Innovators and Disruptors.

In July 2018, we attended New York’s “Fancy Food Show”, in order to review the most interesting innovations in F&B straight from the field, and to help our clients find partners and discover opportunities.

This report features the trends we believe to be shaping the food & beverage industry in 2019: lifestyle adjustments – from vegan to keto; “hot” ingredients – such as cauliflower, tea, coconut, cold brew coffee and nut butters; stress-free solutions – such as on-the-go BFY consumption; and the search for quality protein and “healthy fats” is changing the industry this year. Ethnic flavors, ginger and cardamom are to be found in every category; and sustainable, bean to cup / bean to bar “clean” products take the rein. If last year was about “small batch” and “hand made” – this year is NUTS. In the pure sense of the word. If last year was about protein – this year is gut health.

1. Better For All (BFA)

Consumers tend to merge sustainability and wellness considerations, a phenomenom we dubbed: Better For All (BFA). This combines “better for me”, “better for the environment”, “better for animals” and “better for society”. BFA seems to be the main engine of product innovation at the Fancy Food exhibition.

Plant-Based: plant-based food and beverages are on the rise, as products concentrate on nutrient-packed and protein-rich sustainable ingredients. Examples include peanut, almond and seed butter as the base for snack bars or to indulge with a spoon; using ancient grains in snacks; botanical extracts; and snackification of vegetables and fruit. Notable ingredients in Fancy Food were chickpeas, honey and – still – coconut. Cauliflower‘s versatility made the vegetable appear in various categories, as a low-cal, low-carb, plant-based alternative. Seeds, including chia, sunflower, flax and pumpkin, were commnunicated as super-foods. Legumes and pulses benefit from this trend.

Dairy Free: Beyond vegans and vegetarians, dairy-free appeals to a large population of H&W seekers who feel that dairy is hard for them to process, is less healthy than alternatives and/or is not morally produced. The dairy-free “milk” and yogurt category was very dominant in the show. Desserts – whether chilled or frozen – empahsize their creamy texture and great taste, as these are key trial and preference factors for these categories.

Minimally Processed: raw and unprocessed ingredients, that seem minimally processed and offer “clean eating”, lead health and wellness trends as evident by the Fancy Food Show. Real Food is a leading positioning claim. Vegetables (notably cauliflower) and fruits are the stars.

Functional made Personal: consumers continue to expect specific benefits from food and beverage. Notable claims at the show were energy, weight management, heart and bone health, and nutraceuticals which benefit beauty and appearance. We expect Ayurvedic products to rise in the US in the coming years, as they combine gut health with personalized nutrition.

Ethical and Sustainable: Consumers try to be more responsible in regards to animal welfare, social rights and the environment. Bean to Bar and Bean to Cup were two prominent themes. This usually involves on pack storytelling.

2. Food as an Experience

Millennials and Gen-Z “experience over stuff” mentality is entering food and beverages: companies are responding to these venture-seeking consumers with new formats, extraordinary or out of context ingredients, and Do-It-Yourself, personalized solutions. Digitalization also enables to offer a more compelling experience. In Facny Foods, we didn’t see many personalized (or even Ayurvedic) products, which we expect more of in the coming years.

Around the World: Products offering ingredient and flavors that “take you” to a tour around the world, combining ethnic flavors or exotic ingredients. These offer a global, sometimes extreme experience, appealing especially to Millenials and Gen Z consumers who are more adventure seeking than previous generations. Most popular in Fancy Food were ethnic flavors and condiments, in addition to spicy additions. We saw a lot of ginger and cardamom in the exhibition. Tea, and matcha specifically, are gaining popularity.

Storytelling: Positioning of products as local, artisanal, produced in small batches; sharing brand history and origin; etc. to create an emotional connection to the brand, selling the story beyond the product.

Marlo’s bake shop: Women owned business. Recipes developed by using social media and choosing family recipes from followers and consumers. The company puts the creator’s name and story on the package.

DIY: Consumers have access to more information than ever before, and they can – and want to – do things their own way. Personalization and customization is a way of life in today’s digital world, as is a sense of control. To top it all, more and more consumers want to feel more connected to nature. As a result, consumers take interest in kits and do it yourself solutions, which make them feel empowered and capable.

Like A Pro: Foodie consumers have grown accustomed to interesting, innovative flavors from out-of-home consumption, and they wish to repeat that experience with their home cooking. Manufacturers are following suit, with innovative textures and flavors which give a final touch to the home cooker’s dish, without much effort. A lot of “mixers” that create an AFH, at-home bar experience, and cold brew coffee.

3. Indulgently Healthy

Indulgence, more than a trend, is a prerequisite for other developments and innovations in food: many trends represent attempts to accommodate the ever-present demand for indulgence while satisfying other needs. Today the main challenge food companies face is to offer better- for-you products that do not compromise consumers’ enjoyment and taste. At the show, we noticed a “merging” trend: cross-category indulgence – mixing between formats, flavors and textures, to create a surprising and novel sensorial experience, translated into a unique experience.

Premium: Hand-made, crafted, curated – as well as rare and professional ingredients that help differentiate everyday products

Indulgent Cues: Ingredient such as chocolate and butter (plant based) which suggest a smooth, rich experience. Textures such as “creamy”, “whipped” also add indulgent insinuations.

Guilt-free Indulgence: using healthier ingredients in indulgent products: less or no sugar; functional ingredients; aerated textures that offer less calories; etc.

4. Stress Free and Gut Health

Stress is a huge consumer concern this days; and companies use convenience, new consumption opportunities, as well as fun, humour and nostalgia in marketing, to create a less stressful experience. The gut-mind connection, as key to holistic wellness, was evident in many products. Mindfulness is an emerging claim.

Gut health, specifically probiotic and prebiotic fibers, was very prominent this year. The search for better digestive health includes allergen-free products, as people suffering from gastrointestinal symptoms consider themselves sensitive to certain ingredients.

Convenience: new product and packaging formats to cater to on-the-go snacking, sharing, and other consumption opportunities. This, again, pertains to keto-friendly options.

Allergen-free: products that are school friendly, FODMAP friendly, etc.

Fun and Mental Health: Botanicals and Stress-reducing Ingredients such as functional beverages, promoting calm and relaxation. Fun and humour in branding and communication.

“Boosts”: the emergence of supplements and nutraceuticals – if you’re missing some collagen or protein, don’t worry, just add it to your morning smoothie or afternoon coffee. On the go and “Clean Energy” was also noticeable.

5. Low Carb and Sugar-Free Lifestyle

Moderate carbs and low-carb diets, such as Paleo and Keto, created new takes on health and wellness. Ingredients such as MCT oil and other “healthy fats”, protein and gluten-free, grain-free and sugar-free ingredients are incorporated into snacks and beverages, for easy on-the-go consumption.

MCT Oil and Ghee: incorporated into various products, including snacks and beverages.

Grass-Fed and Pasture-Raised: the source of proteins, including dairy, poultry, meats and eggs, is important to consumers who follow “primal” diets and BFY low-carbers.

Bite Fuel: Power Bites – protein cookies. Grass fed whey

Grain-Free and Peanut-Free

: gluten-free is not enough – Paleo and Keto dieters look for legume-free and grain-free products.

Caffeine and Cold Brew: sugar-free and satisfying, Cold Brew coffee’s rise continues, with cold brew as ingredient in other products as well.

Alternative Sweeteners: maple, considered both a “Paleo friendly” and a vegan sweetener that is perceived as a natural alternative to processed sweeteners, is taking the center stage. Stevia and monk fruit are used as sweeteners but, unlike previous years, are not being promoted as the key product and positioning claim.

Amazon continues to be the online grocery leader in the US, but more people purchase groceries in-store/online from Walmart than other leading food retailers and supermarkets, according to Packaged Facts. 59% of grocery shoppers have purchased groceries from Walmart in the last 3 months, with 58% purchasing in-store and 5% purchasing online. Comparatively, about 9% of grocery shoppers have purchased groceries online from Amazon.

According to the report, Walmart’s pickup strategy has surpassed competition, largely driven by its combination of curbside pickup and towers. Among click-and-collect consumers, about 42% identified Walmart as the pickup location for their last order — three times the amount that cited Target, which came in second.

This month, we saw a few great examples for the online grocery strategy in the US, as Walmart, Target and Kroger are giving Amazon a run for its e-grocery money.

(1) Kroger

Kroger has launched Kroger Ship, a new direct-to-consumer e-commerce offering in 4 U.S. markets, offering free grocery delivery (for orders over $35) on a selection of 4,500 exclusive private label brands as well as 50,000 other grocery and household items.

The company is testing driverless grocery delivery with a pilot program at a Fry’s location in Scottsdale, Arizona; The Kroger pilot with technology partner Nuro will kick off with Nuro-equipped, manned Toyota Priuses and progress to use Nuro’s unmanned driverless delivery vans by the fall.

The company is also expanding its relationship with Instacart to bring same-day delivery service to 75 additional markets in the U.S. by late October, making the service now available at more than 1,600 stores.

Kroger also launched a store on Alibaba’s Tmall Global platform, the largest e-commerce platform in China, featuring its Simple Truth natural and organic brand.

(2) Walmart

Walmart’s new Click-and-Collect offering is allowing the retailer to grow its e-commerce offering faster than Amazon, according to Morgan Stanley analysts. Walmart’s Click & Collect service is now available in 1,800 stores, up from 0 one year ago, and the feature is driving loyalty and greater frequency among consumers.

Walmart is also working to automate grocery delivery, with two new tech partnerships aimed at simplifying the grocery delivery process.

The retailer has teamed with Waymo – formerly Google’s self-driving car project – to pilot an online grocery service in which driverless cars pick up customers at their homes and take them to the store to collect their orders. The service is now being tested in Chandler, Arizona.

Walmart also announced that it has partnered with Alert Innovation on a test of its Alphabot robot to help fill online grocery orders faster. The automated storage and retrieval system, developed for Walmart, is being installed at the retailer’s supercenter in Salem, N.H. Automated mobile carts will retrieve ordered items and ferry them to personal shoppers at one of four pick stations. The associates then will pick, assemble and deliver the orders to customers.

In addition, in August, the company was granted a patent for temperature-controlled vehicles.

(3) Target

Target continues to expand its Drive Up program after launching in one market last October. The service lets guests place orders in the Target app, then have their items brought right out to their car. Target Drive Up is now available in dozens of states, including California and Colorado, which were added this month/

The retailer is also expanding its same-day delivery service to two major markets in Montana in partnership with Shipt, expanding to service to 100,000 new households across the Billings and Bozeman metro areas. By the end of the year, Target plans to offer same-day delivery to 65 percent of U.S. households across 180 markets and is has also committed to expand its same-day delivery to all major product categories by 2019.

Available through the Prime Now app, the service is free for orders of more than $35 collected in an hour or more. Customers can elect to have their order ready in 30 minutes for a $4.99 fee. The Prime Now app lets customers notify Whole Foods when they are coming to pick up their groceries. Prime Now customers will have dedicated parking spaces where they can wait for an employee to bring the order to their car.

We analysed all of the participants’ presentations and conference calls, selected 450 slides and quotes, and turned those into a ~35 slides presentation, featuring selected statistics, case studies and examples by the world’s leading companies.

This year, companies discussed the following strategies and trends:

Macro-Trends

Channel Diversification – the need for an omni-channel strategy in a multiple-channel world, and the growth of convenience, discount and digital commerce.

Demographic Changes – specifically, how Millennials and Gen Z consumers use digital and social media, and how their values drive change in health and wellness and social responsibility.

Digital Technology – an enabler and driver of tremendous changes in the industry.

Emerging Economies – driving growth through new markets, using different value propositions.

Consumer Trends

Snacking: a huge trend – most companies discussed their strategy for adapting to the new “mini meals” and “on the go” consumption reality, whether through brand extensions or M&A

Premiumization: in many markets, consumers appreciate quality, authenticity and ethics and are prepared to pay a premium price for those.

Digital

Ethics and Authenticity

Strategic Trends

Companies discussed current and future plans to partner with, acquire, invest in, or build, brands that are positioned to respond to future brands. Corporate VCs / incubators are increasingly popular, as well as “venture brands” that are aimed at providing companies with insights, rather than becoming the next $1bn brand.

Innovation is still focused on power/ core brands, many of which received a strategic makeover and/or a local adaptation.

The new retail reality (or: “We’re all in the same boat”) presents more retailer-CPGs collaborations than in the past. Companies are tailoring their proposition to the channel and shopping opportunity (after what seems like a few years of decrease in “shopper marketing” attention).

Digital commerce was, finally, the hottest subject (we’ve been complaining about the lack of e-commerce strategy since 2016). The accumulated data, trials and errors, pay off for companies and most reported impressive growth in the segment. Health and wellness consumers are strong e-com shoppers, a fact which companies follow up on.

Our database holds dozens of other successful innovations, strategies, and case studies from this conference (and thousands of examples in general). Please contact us if you would like to know more about any of the trends that are changing your industry.

Walmart’s recent acquisition of Indian e-commerce platform Flipkart will give the world’s largest retailer a stronghold in one of the hottest growth markets of the moment, but the deal also has the potential to give Walmart another edge, one with global implications. That is, in the world of mobile commerce, thought by many to be the future of retail, and a playing field where Flipkart has unique expertise.

Walmart announced on May 9 that it would become the largest shareholder in Flipkart Group, paying $16 billion for a 77 percent stake in the company, and winning out against Amazon in a deal that marks Walmart’s largest acquisition ever (nearly five times the $3.3 billion it paid for Jet.com in 2016).

“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of e-commerce in the market,” said Doug McMillon, Walmart’s president and CEO, in the company’s official announcement of the deal. “As a company, we are transforming globally to meet and exceed the needs of customers, and we look forward to working with Flipkart to grow in this critical market.”

The Indian market is indeed a critical one for global retailers, representing perhaps the single biggest growth opportunity in the world today, with a population of 1.3 billion people whose spending power and digital access is increasing by the day. A recent report from Morgan Stanley estimates that India’s e-commerce market will reach $200 billion by 2026.

That alone is enough to justify the deal, but there’s another huge advantage to entering the Indian e-commerce market–the country is uniquely primed for mobile commerce.

India already has as many smartphone users as the U.S. has people – a little over 300 million with 176 million more to be added in the next five years according to a 2017 study from Counterpoint Research.

In fact, Indian consumers rely more heavily on phones to access the web than any other country in the world, with users accessing the Internet through their mobile nearly 80 percent of the time. (Source: StatCounter GlobalStats). In many ways, India has skipped over desktops completely and entered the Internet age directly through smartphones.

Devices used to access the internet in India; source: https://www.theatlas.com/charts/HJcNgwFhe

The reasons for this are economic as much as they are about preference – not only does a computer cost more than a smartphone, but power issues are widespread throughout the country.

All of these factors combine to give India one of the most mobile-driven consumer bases in the world. At the same time, consumers across the globe are increasingly making their purchases on mobile devices.

Over the last seven years, the percentage of e-commerce dollars spent via mobile devices in the U.S. has increased exponentially, from 1.8% in Q2 2010 to 24% in Q4 2017. And the U.S. is by no means the leading market for mCommerce, with other countries like the U.K., Japan, Australia and South Korea, using mobile devices even more frequently than their U.S. counterparts to make online purchases. (Source: Statista)

M-commerce share of total digital commerce spending in the United States from 2nd quarter 2010 to 4th quarter 2017. Source: Statista

During this same time period, Flipkart (which launched in 2007) was busy building a sophisticated e-commerce platform that could accommodate the unique dynamics of the Indian market, where spotty internet connectivity is still a frequent occurrence.

In fact, the unique combination of a large, mobile-driven consumer base, but unreliable infrastructure, has been formative in the direction Flipkart has taken and where it is today.

In 2015, the company announced that it was turning off its website and directing all shoppers to its app. The company had not, up to that point, been able to replicate the streamlined, engaging shopping experience of its app on its website, a problem that was exacerbated by the country’s unreliable internet. The engagement and conversion metrics of app users were much stronger than those of customers who visited Flipkart online, according to Peeyush Ranjan, Flipkart CTO, and so the company made the decision to push all consumers to its app.

Customers however, were less than pleased with the app-only strategy, and within a few months the Flipkart website was back, but in a vastly different form, indicating the need for an omni-channel, and not a mobile-only strategy.

In response to the customer outcry at the removal of its website, Flipkart focused with renewed energy on the website experience. The result was Flipkart Lite, a mobile website that feels and works like a downloadable app but operates on the open web, with low data usage and fast speeds to boot. Placed alongside its already strong app platform, the e-tailer (and its customers) suddenly had the best of both worlds. Through a little bit of trial and error, the company had become, in a matter of months, not only a mobile-friendly platform, but a mobile-first one.

Before: Flipkart website (mobile site). Source: WayBack Machine

After: Flipkart Lite (mobile)

The results were undeniable, with Flipkart reporting huge bumps in time spent on site, re-engagement (bringing the shopper back after they’ve left your site) and conversion rates following the launch of Flipkart Lite. [3x more time spent on site, 40% increase in re-engagement rate, 70% increase in conversion among those arriving via Add to Homescreen; Source: Google Developers]

In light of all this, Walmart’s decision to spend $16 billion for a controlling stake in this regional e-commerce platform begins to look, at least in part, like a global play for mobile dominance.

Walmart is by no means a novice in the world of mobile commerce, but the kind of insights it will be able to glean from Flipkart’s past and future mobile endeavours could be invaluable to remaining ahead of the curve, and Walmart CEO Doug McMillon said as much on a call with analysts May 9 after the acquisition was announced.

“At Walmart, we’re learning how to build–and how to partner to build–retail ecosystems around the world. India will now become a key center of learning for our entire company,” he said.

COO Judith McKenna offered further insight into exactly what the company thinks it can learn from Flipkart.

“Not only is [Flipkart] innovative [with the] problem-solving culture that they have, but they are doing some great work both in the AI space, how they are using data across their platforms, but particularly in terms of the payment platform that they’ve created through PhonePe,” she said on the call. “All of those things we can learn from for the future and see how we can leverage those around the international markets and potentially into the U.S. as well.”

Here are some of the Flipkart initiatives that could be of particular interest to Walmart’s mobile ambitions, and more:

Artificial Intelligence & Machine Learning: Last December, Flipkart Executive Chairman and co-founder Sachin Bansal, unveiled an initiative called AI for India, designed to spur the development of AI solutions for e-commerce, and beyond, in the country. Flipkart already uses AI for personalization, product discovery, search, fraud protection, logistics, cataloging and more, and its continued investment in the space is expected to further increase the application of these technologies across the company’s e-commerce ecosystem.

Mobile Payments: The company’s mobile payment platform PhonePe, akin to PayPal or Venmo, is helping to transform the way Indian consumers pay for products and services, both online and offline (for point-of-sale transactions using Bluetooth technology).

Use of Consumer Data: The sheer size of Flipkart’s consumer base (13 million visitors a day) means that the company has quickly become adept at processing huge amounts of data daily, 1.2 petabytes every day, in fact (Source: Flipkart). Given its history of agile innovation, Flipkart’s ongoing efforts to find new, better ways to manage and utilize consumer data could offer invaluable insights that Walmart can apply globally.

Top-Tier Tech Partners: The remaining 23 percent stake in Flipkart will continue to be held by existing Flipkart shareholders that include Tencent and Microsoft, thereby aligning Walmart with two major tech players.

The Flipkart acquisition isn’t the only big move that Walmart has made this year. In April, the company announced that it would be selling off its majority stake in the steadfast, but slower growing, U.K. retailer Asda.

It’s clear that Walmart is hyper-focused at remaining at the forefront of digital retail, and the Flipkart acquisition may well prove a key piece of achieving that ambition.